(Post Script: Page series D and E
were price and relative strength charts in the original publication.
Current price and relative strength charts can be viewed using the hyperlinks
associated with the ticker symbols contained in the page on investment
vehicles.)

Argentina

Argentina scored a mid-range 5.0. Its relative performance over the last year
has been dismal. Its five-year performance has not been much better. The
Argentina market had a high in mid 1994 and then fell to a low in 1995 (page
D-1). It has recently broken out to the upside from a two-year symmetrical
triangle pattern.

Argentina’s score was helped by a change to more political freedom, no
corporate capital gains tax rate, and a 1.5% individual capital gains tax rate.
There is little else to commend Argentina. Argentina suffers from an 18.8%
unemployment rate. It has a very low economic risk score.

Although the technical pattern is positive with a recent positive breakout
from a coil, there is no compelling fundamental argument to invest in Argentina.

Australia

Australia scored a 6.7, a tie with the United States and France for seventh
place. It relative strength continues in a downtrend. The First Australia Fund
(Page D-2) has been in a trading range for about ten years. It is currently at
an apex of an asymmetric triangle.

Australia scored well on most aspects. It has a respectable educational level
and numbers of scientists and engineers, low inflation, no corporate capital
gains tax, and a 1.5% individual capital gains tax.

Australia’s GDP growth rate is a moderate to low 3.0. The export growth
rate is 7.9%.

Australia seems to be a solid performer. The lackluster performance of its
market over the last five years indicates that there may be some opportunities
to buy individual companies on a valuation basis. The technical pattern
indicates that the First Australia Fund is a candidate for a breakout from a
multi year coil. The current price is $8.62. The support level is at $7.50.
Resistance levels are at $9.50 and $11.00.

Austria

Austria scored a good 6.6. Its 1 year and 5 year relative strength has been
moderate. The Austria Fund is down significantly from 1990 but shows a gradual
and orderly rise since early 1995. The rise has been anemic and has not matched
the rise in the S&P 500. The relative strength continues in a downtrend.

Austria has scores well most cultural and investment aspects; however it is a
mature country with high tax rates resulting in low GDP and export growth.

I see no compelling reason to invest in Austria.

Belgium

Belgium has a long history as a highly industrialized nation. Its textile
industry dates from the Middle Ages.

Belgium scored a good 6.5. Its one-year and five-year relative strengths have
been respectable. The performance of its WEBS (Page E-3) indicates a rising
pattern over the last year but it has under-performed the S&P 500.

Belgium scored well on most aspects. Its growth rate suffers from high income
taxes and high value added taxes. It is however one of the countries without
capital gains taxes. Although it does not show up in the scores, this nation of
about 10 million people has three official languages, Dutch, French, and German,
which is spoken dependent on the area of the country. This has to be a drawback.

From a valuation standpoint there may be some investment opportunities in
Belgium. In general, Belgium is a mature country with high tax rates and slow
growth.

Brazil

Brazil has had a history of runaway inflation and large foreign debts. An
economic recovery plan instituted by a popular president, Henrique Cardoso,
seems to be getting the inflation under control. The foreign debt was
restructured and reduced in an agreement with lenders in April 1994.

Brazil scored a low 3.0. Its relative performance has been good over the last
year and fairly good over the last five years. I believe that this is a result
of the economic recovery plan coupled with the fact that valuations were very
low previously. In addition, Brazil is privatizing a lot of industry, which is
creating attractive investment opportunities. The Brazil Fund (Page D-4) shows
an uptrend since 1988 with a positive breakout in early 1997 from a two year
descending triangle. The relative strength has been primarily sideways since
1988.

Generally all the individual scores were low or medium. Brazil scored
exceptionally low on political and economic risk.

The investment opportunity here comes from the changes resulting from the
economic recovery program and from privatization. Privatization creates
opportunities because government owned companies are generally run very
inefficiently. Once these companies are in private hands with profit making
objectives, they become more efficient which results in strong earnings growth.
The Financial Times had a special supplement on Brazil on June 10, 1997. This
supplement included a list of companies that are to be privatized.

There is significant risk of currency devaluation. Brazil has very little
reserves and would probably succumb very quickly to attacks on the currency. The
history of the Brazil Fund over the last ten years indicates that the
performance of the Brazilian stock market has not been negatively impacted by
currency problems.

Brazil looks like a good bet to me for the intermediate term, one to five
years. Brazil is getting its economy under control. It is creating investment
opportunities by privatizing industry. The market has been in an up trend for
ten years with a two-year decline arrested in 1997. The Brazil Fund is currently
valued under its 1994 peak.

Canada

Our neighbor to the North has about the same landmass as the U.S. but a tenth
of the population. The land is endowed with many natural resources. It is not
generally hospitable to agriculture.

Canada scored a respectable 6.4. Its one-year and five-year relative
strengths have also been respectable. The Fidelity Canada Fund (Page D-5) has
been in an uptrend since 1988. The relative strength matched the S&P 500
until late 1993, at which time the S&P 500 started outperforming the
Canadian fund.

Canada scored well on most aspects. Its income taxes are in line with most of
the industrialized nations. However, its maximum individual capital gains tax
rate is high at 40.6%. It has some investment restrictions for nonresidents. The
investment as a percent of GDP is a low 19%.

Canada is not living up to its potential. It is rich in land and resources,
has good political and cultural environment, but is not making the investments
necessary to grow. Its wealth and energy are being diverted to social issues.
This results in a low GDP growth rate. Admittedly the low GDP growth rate is
mitigated by the fact that the GDP per capital is high at over $20,000 U.S.

Canada is a reasonable bet. Its performance is trailing but paralleling the
U.S. It should benefit from NAFTA. And it is endowed with natural resources.

Chile

How can a country that is a 2650 mile long, 110 mile wide mountain range,
with 92% of the population resulting from interracial marriages, and political
upheaval, be successful. One reason it survives is that it is rich in natural
resources. Among other things, it’s the world’s largest producer of copper.

Chile’s score is a low 4.0. Its one-year relative strength is 81; the
five-year relative strength, 65. The Chile Fund (Page D-6) increased in value
significantly in the early 1990’s. Since early 1994 it has been in a trading
range and the relative strength has been falling. It is currently at the high
end of the trading range.

Chile generally scored low to moderate on most aspects. Its GDP per capita is
a low $2595 and the GDP growth rate is a moderate 4.5%. The people are taxed
heavily. The maximum individual income tax rate is 48% and the standard value
added tax rate is 18%. The maximum individual capital gains tax rate is 48%.
There are investment restriction for nonresidents and exchange controls. The
export growth rate is a healthy 13.8%. It appears that the country is living off
its natural resources, without letting the people benefit from this natural
wealth.

People are getting rich off of Chile’s resources, but they are unlikely to
be part of the general population and they unlikely to be investors in Chile’s
domestic companies’ stocks. The Chile Fund is in a three and one-half year
trading range. A breakout above 29 would be a technical indication that the fund
might go higher.

China

China is a gigantic country undergoing massive change. It has 1.2 billion
people, over one-fifth the world’s population. Since 1949, it has been
politically and economically repressed under Communist rule. However in the 1980’s
and 1990’s, under the leadership of Deng Xiaoping, it has gradually become
less politically repressive and a "socialist market economy" has been
implemented. The economy has gradually become freer.

China has a culture many centuries old. Its written history is 3500 years
old. Its culture has been one of enterprise and organization. The people are
hard working and have an entrepreneurial spirit. They not had ample outlets for
their savings. With the return of Hong Kong to China and the opening of security
markets within China, the Chinese are becoming enthusiastic stock and bond
market investors. The Shanghai Securities Exchange was incorporated in December
1990; the Shen Zhen securities exchange in April 1991. As of 1991, 90% of the
investments were in bonds.

The Chinese equity markets have been very volatile. They are immature markets
with inexperienced investors coupled with registration frauds and subject to
price manipulation. There are a number of funds that invest in a combination of
Hong Kong and China companies. Charts of five funds with significant holdings in
China are shown in Pages D-8 through D-11 and Page D-18. It appears that the
China market had a peak at the end of 1993 and dropped until 1996. It appears
currently to be in an up trend.

China scored midrange, 4.6. Its score was depressed by low political freedom;
low GDP per capital, high inflation rate, high value-added taxes, low R&D
expenditures. The GDP per capital is only about $451. The inflation rate was
14.7% but has been improving.

On the positive side, China’s GDP growth rate was very high at 7.9%. Other
sources estimate it at over 10%. The export growth rate is a very high 19.1%.
What is intriguing is that it appears that China has the capability to sustain
these very high growth rates over an extended period of time due to the low base
from which they are at currently and the improvements in political and economic
freedom.

After four decades during which Chinese could only rent their dwellings,
China is opening the door to home ownership and is encouraging the purchase of
homes.

14 This will create a significant opportunity for construction companies,
interior decorators, real estate brokers, mortgage companies, and the like. This
not only opens up new industries but it provides an incentive for prospering.

Given the enterprising spirit of the Chinese, the changing political and
economic environment, the potential for sustaining high growth rates, and the
fact that there is no individual capital gains tax in China; I believe that
China is a good bet for the long term. I’ve put some money on China and intend
to put more. The high volatility of the Chinese market should be treated as
providing opportunities to buy at attractive prices by buying the dips.

Czech Republic

In January 1993 two independent states, the Czech Republic and Slovakia
replaced Czechoslovakia. Czechoslovakia has historically been one of Europe’s
leading industrialized nations. Under Communist rule is one of the most
prosperous of the Communist nations. After the collapse of the Communist State
in 1989, Czechoslovakia moved quickly to establish economic reforms. Although
standards of living fell somewhat during the transition, since 1994 they have
started to move up again.

There are problems though. The development policies of the Communist era
combined with a lack of attention to environmental issues produced serious
environmental problems in the Czech Republic. Drinking-water supplies and much
of the country's soils are contaminated with heavy metals and other industrial
and agricultural wastes. Air pollution is a serious problem in many cities,
particularly in the region of northern Bohemia; pollution has also degraded many
of the country's forests.

The Wall Street Journal recently had an article highlighting issues with
large formerly Communist run businesses.

16 The companies are producing outdated
products with outdated and inefficient production processes. Formerly much of
the product was exported to Russia. The exports to Russia have dried up and the
Czech’s are importing modern products from other countries. Management is slow
to address the problems. Although the industry was privatized, it was done by
giving equity shares to the Czech citizens, who in turn turned their share over
to investment funds that are controlled by the major banks. These major banks
are state owned. These banks know a lot more about lending money than running
companies. The result is that the Communist era managers are still in control of
the companies and they have taken on a lot of debt. Analysts estimate that about
40% of large Czech companies are technically bankrupt.

The Czech Republic’s score was 3.3. Its one-year relative strength is 71.
The Czech Republic Fund has a short trading history of about two years. It
initially fell, then rose through 1996. In 1997 it has been volatile with no
clear pattern. The relative strength is declining.

The scores tended to be universally moderate to low. Taxes are high for both
corporations and individuals. The standard value added tax is one of the worlds
highest at 23%. GDP per capital is low at $1601 and the GDP growth rate in
uninspiring at 3.5%. Inflation rate is near 10%. Short-term interest rates
approach 20%.

The numbers look discouraging, but this may be an opportunity that arises out
of change. I am impressed with the progress that Czechoslovakia and now the
Czech Republic have made at confronting their problems head on and resolving
many of them. I believe that the citizens will strive to achieve parity with the
rest of industrialized Europe. I think that the Czech Republic deserves a bet
for the long term. It will probably be a bumpy ride though. One should watch the
technical chart patterns for buying opportunities.

France

Admittedly I am biased against France; a country that builds Citroen
automobiles, that popularized sauces in order to cover up tainted meat, that
popularized perfume in lieu of personal hygiene, that is passing laws that
business with them be done in French regardless of what the rest of the business
world is doing. France’s unemployment rate is 11.6% - and they deserve it.

However France’s score is 6.7, tied with the U.S. France’s citizens are
well educated. It has a respectable proportion of scientists and engineers; a
low inflation rate; a high rate of R&D expenditures; good GDP per capital.
Its GDP growth rate is 8.1%, second only to Korea. The export growth rate is a
moderate 5.8%.

France taxes its citizens heavily, at least the wealthy ones. The maximum
individual income tax and capital gain tax rates are 56.8%. This is on top of a
standard value-added tax rate of 19%.

The France Growth Fund (Page D-13) has traded up and down since 1990. It is
currently near the apex of an ascending triangle, a bullish formation. The
relative strength has been declining since the beginning of 1994.

Is there money to be made in French stocks? I don’t know. I will leave it
for others to put down their money here.

Germany

Germany has been miraculous in recovery after starting and losing two world
wars. The nation of the fabled deutsche mark; producer of Mercedes Benz’s and
Porsches; homeland of my ex-wife, long gone with most of my worldly assets.

Germany scored a 6.5, in line with several other European industrialized
nations. Relative strength has been good, especially in the last year. The
Germany Fund and the New Germany Fund (pages D-14 and D-15) indicate that the
German market had a spike at the end of the 1980’s. After falling back, the
market went in a six year trading range. It has broken out above the trading
range and has risen the width of the trading range.

Germany scored well on expected educational achievement. It has one of Europe’s
highest percentages of engineers and scientists. The inflation rate is low.
R&D expenditure rate is high. The military expenditure rate is relatively
low (thank goodness). The GDP per capital is good at $21,488 with a mediocre
growth rate of 2.3%. The export growth rate is a lackluster 4.4%. Individual
taxes are high with a maximum income tax rate of 56%.

Germany is a mature country with quality education, producing quality
products, but having difficulty competing on the global market place. In the
short term, the stock market is showing strength and may go higher. In the long
term better opportunities lie elsewhere.

Hong Kong

Hong Kong scored an impressive 9.1. Its one-year and five-year relative
strengths exceed those of the United States. The performance of the
Guinness-Flight China & Hong Kong Fund (page D-17), the Fidelity Hong Kong
& China Fund (Page D16), and the WEBS (Page E-7) indicate that Hong Kong’s
stock market performance continues to be in an up trend. I hear and read that
the mainland Chinese are investing heavily in the Hong Kong market, driving it
higher.

As I write this Hong Kong is in the process of being handed over from British
rule to Chinese rule. There are both optimistic and pessimistic schools of
thought. The optimists believe that China will not tamper with success. They
feel that the Chinese government will let Hong Kong continue on as it has in the
past. In fact, with Hong Kong becoming part of China, restrictions for doing
business in China from Hong Kong will decrease and Hong Kong, being the door
into China, will prosper even more. The Hong Kong stock market was setting
record highs up to and including the last day of trading before the hand-over.
Much of the money was coming from Mainland Chinese investment.

The pessimists feel that the Chinese government has demonstrated itself to be
a repressive regime that has been unable to stand by and allow the political
freedoms necessary for business to flourish. They feel that the Chinese
government will start down the road to political repression. In fact, it may be
forced to do so. The dichotomy between the freedom in Hong Kong and the
repression in China may be to great to be allowed to endure. Many wealthy people
have left Hong Kong for other countries over the last several years.

I would not bet my money long term on Hong Kong. At this point it has had
everything going for it. There is a high risk that it will go downhill from
here. The downside potential is greater than the upside potential. It is likely
that political and economic freedoms will be repressed. It is likely that taxes
will be increased. The cost factors are already very high in Hong Kong. It has
high labor costs and very high real estate costs, probably the highest in the
world. If Hong Kong is part of China, why not move businesses over to Mainland
China where the cost factors are lower.

Hong Kong has the potential to repeat Japan’s current situation. Stock
prices are being bid up by inexperienced investors and may reach unrealistic and
unsustainable valuations. The real estate market is over-valued. When stock
prices and real estate prices quit going up, they will come down – hard. The
people will feel poor in that they will have lost both real assets and paper
profits. The banks will be stuck with a lot of non-performing loans with no
collateral behind them.

My bet is that, long-term, China will drag Hong Kong down and Hong Kong will
drag China up. Decades from now they will meet in the middle. I feel that Hong
Kong will be beneficial for China. I would rather put my money into Mainland
China businesses than in Hong Kong.

India

I often hear of the virtues of investing in India: so many consumers; lots of
highly educated people, the next great growth country. Meanwhile the stock goes
nowhere.

India’s score is 1.0. The five- year relative strength is 38. The
performance of the India Fund (page D-19), the Jardine Fleming India Fund (page
D-20), and the Morgan Stanley India Investment Fund (page D-22) indicate that
the Indian stock market has been declining for the last three years. It has
recently broken above its downtrend line.

The predominant religion is Hindu, which is not especially conducive to
success in a capitalist society. Although there are some well-educated people in
India, there are not many relative to the size of the population. India had the
lowest literacy rate of all the study countries, 36%. The number of scientists
& engineers is a very low 151 per million. Inflation rate is high; corporate
tax rates are high, individual tax rates are not low; the value added tax is
administered locally so the rate varies throughout the country; the rate of
R&D expenditures is low. All this results in a GDP per capital of $370. The
GDP growth rate is 5%

Come to think of it, usually I hear of India’s virtues from people who left
India and are living and working in the United States. I’ll let others take
advantage of India’s "great growth opportunity".

Indonesia

In 1965 General Suharto, head of the army’s strategic command, suppressed a
coup against President Sukarno lead by army officers. As a result General
Suharto ended as the head of government in 1966 and has remained there ever
since. General Suharto, his relatives, and his friends have become very wealthy
people. Unfortunately it appears that some of that wealth has found its way into
the pockets of U.S. rulers.

Anyway, Indonesia scored a 4.1. Five year relative strength has is 53,
although one year relative strength has been a more respectable 80. The
performance of the Indonesia Fund and the Jakarta Growth Fund (pages D-23 and
D-24) indicate the Indonesian market declined by one-half from 1990 through
1991, recovered somewhat through 1992 and 1993, and has fallen since. The
relative strength shows this same pattern. It does appear that the stock prices
may have recently broken out to the upside from a three and one-half year
symmetrical triangle pattern, a bullish indication.

Indonesia’s scores are typically moderately low. It rates low on literacy,
72%. It spends the least portion of its GNP on education, 1.3%, of any of the
study countries. Inflation is fairly high, over 8%. Short-term interest rates
are over 12%. It spends little on R&D. The GDP per capital is $703 with a
5.7% growth rate. The export growth rate is a healthy 12% (although one can
question how much of this is benefiting the country as opposed to benefiting the
rulers).

Wake me up when Suharto dies, and I’ll take another look. Until then I will
pass on Indonesia.

Ireland

There are more Irish descendents in the United States than there are in
Ireland. England is considering formally apologizing to Ireland for letting the
people starve during the potato famine of 1845-1847.

Companies engaged in manufacturing and qualifying service activities are
taxed at a reduced rate of 10% until 12/31/2010. International financial
services are taxed at 10% until 12/31/2005.

Ireland scored a competitive 6.6. Its one-year and five-year relative
strength has been 91 and 94 respectively. The Irish Investment Fund (page D-25)
started a steady climb in early 1993. It has climbed from a low of $6.50 to a
current value of $16.12. The relative strength has been predominantly sideways
through this period with a slight drift downward over the last two years.

Ireland’s scores were generally competitive with the industrialized nations
of Europe and the U.S. It is a little light on engineers and scientists, 1871
per million. It has heavy individual and value added taxes. It spends little on
the military, which is advantageous. The GDP per capital is $15,807 which is
lower than most of the industrialized European nations. The growth rate is 4%.
Inflation is low and interest rates are reasonable. Ireland has a high level of
exports per capital, $12,207 with a 13% growth rate.

I like Ireland. I believe the reduced tax rate for manufacturing and other
services to attract businesses will prove to be an effective technique to
bootstrap Ireland up. Although it is anecdotal data, several of the companies
that I have worked for or invest in have established plants in Ireland and have
been satisfied with the performance of the plants. Given that the population of
Ireland is only 3.6 million, it doesn’t take a whole lot of this kind of
activity to dramatically change the prospects for a country.

Israel

Israel scored a 3.9. Although its stock market has done well in the last
year, its five-year relative strength is 48. The First Israel Fund (page D-26)
declined through 1994, traded sideways in 1995, and started a climb in early
1996. The relative strength declined from through 1994 and 1995. It has been
moving sideways for the last year.

Israel has attracted a large number of highly educated people. Its proportion
of scientists and engineers is the world’s second highest at 4826 per million.
Only Japan's is higher. There is no corporate capital gains tax and individual
capital gains taxes are limited to 10%. Exports per capita are $3519 and are
growing at 10.1% per year. Israel rates low on political risk and midrange on
financial and economic risk. The currency has a history of declining in value
against the U.S. dollar.

Israel suffers from a high inflation rate, approximately 11%. It is making
little progress in curbing the inflation. It has high corporate and individual
income tax rates plus a 17% standard value added tax. Israel expends an
excessive amount on the military - 9% of GNP. The GDP per capital is $11,930
with a 4.1% growth rate. Israel rates low on political risk and midrange on
financial and economic risk. The currency has a history of declining in value
against the U.S. dollar.

I don’t find any compelling argument for investing in Israel country funds.

Italy

Italy scored a 5.0. The Italy Fund’s (page D-27) relative strength has been
declining through the 1990’s. The stock has been in a seven year long
declining triangle pattern.

Italy has a mature population with no forecasted growth. Its inflation rate
is moderate and declining. Corporate and individual income tax rates are high
and there is a 19% standard value added tax rate. The unemployment rate is
11.1%.

Italy’s GDP per capita is $21,000 with a lackluster 2.2% growth rate.

Generally Italy scores run somewhat below that of other industrialized
European countries.

When I think of Italy, I think of a chaotic disorganized country with shoddy
goods and a problem with the Mafia. As I read about Italy I find that the Mafia
is a real problem, corruption is a real problem, there is high unemployment,
etc. However Michael Porter paints a different picture. He describes an Italy
with a robust network of small family owned companies very much in touch with
the fashions of the world and able to turn on a dime. It may be that the
strength of Italy is in an underground economy, hidden from the published
numbers.

Anyway, at least on the surface, there are better bets elsewhere.

Japan

Japan’s most beneficial accomplishment may have been losing World War II.
The victors prohibited Japan from spending money on military activities. The
U.S. in particular went in and helped rebuild Japan and introduced the most
modern processes and technology. The Japanese have a very old well-established
culture of discipline, order, and cooperation with each other. They learned
their lessons well. They gradually and continually improved their products and
marketing and took over entire industries such as consumer electronics and
carved out very large pieces of other industries such as autos.

Japan scored a 7.3, tied for fourth place behind Singapore, Hong Kong, and
Taiwan. Japan’s stock market performance over the past four years has been
poor; the poor performance is due to a correction from extreme over-valuations
that resulted from an extreme run-up in the 1980’s. Charts are included for
six Japan country funds in Appendix D (pages D-29 through D-34) and for the WEBS
(page E-9). The charts show a declining stock market since early 1994 with a
recent bounce. The recent strength seems to be in the OTC markets.

Japan has a mature population with a low growth rate. Its religion is
predominantly Shinto, which is more a set of principles than a religion. These
principles are conducive to business conduct. Japan scores well in education and
has 5677 scientists and engineers per million population, the worlds highest
(and it has very few lawyers). Japan has essentially no inflation and a
short-term interest rate of .5%. Japan spends 3 % of GNP on research and
development and wastes very little money on military expenditures. The
value-added tax is a low 3%. GDP per capital is $26,707, exceeding the United
States. The GDP growth rate is 3.2%, also exceeding the United States.

Japan would have scored higher yet except for very high income tax rates. The
maximum individual income tax rate is 50% plus a 20% local rate.

Although the United States politicians are making much ado about imports from
Japan, Japan’s export per capita is only $3,538, significantly below many
other countries. The export growth rate is 9%, which is not excessive. Its
imports per capital are $2683 with a 7.4% growth rate.

Japan is going through some turmoil currently. The stock market has been
falling from a very lofty overvaluation. Real estate, also, was overvalued due
to speculative excesses. As these values drop people and businesses are seeing
paper fortunes vanish and banks are getting stuck with large numbers of
non-performing loans with little or no collateral behind them.

Japan will eventually work its way through these problems and will continue
to prosper. Japan will again be a good investment at some point in the future.

Korea

This study is limited to South Korea, the Republic of Korea.

Korea’s score was respectable, 6.3; however, its relative performance has
been lackluster over the last year and last five years. The Korea Fund (page
D-35) indicates that the Korean market peaked in 1989, dropped by two-thirds in
1990, recovered somewhat in late 1994 or early 1995, and has since fallen back.
The fund prices have the look of a large descending triangle with resistance
currently at 22 and support at 12. The fund is currently at 13.87.

The Korean market was a strong performer through the 1980’s until 1988. It
had foreign exchange controls so the trade surpluses could not be recycled into
international capital markets. As a result Koreans invested in equity and real
estate markets. The Korean Ministry of Finance (MOF) limited investment by
foreigners to indirect investment vehicles, such as closed-end country funds and
convertible Eurobonds.

The market started declining in 1Q89. The Ministry of Finance instituted
relaxed foreign investment restrictions in order to prop up the market. Even so,
the market has been a lackluster performer since then.

Korea’s score benefited from an 8.8% GDP growth rate and a 29% export
growth rate, each the highest of all the countries. It has a moderate rate of
inflation, 5.7%. The R&D expenditures are 2.8% of GNP and has a healthy 2636
engineers and scientists per million population. Investment is 36% of GDP.

Factors pulling down Korea’s score included lack of political freedom, low
GDP per capital at $7421, high individual income tax and capital gain tax rates,
and the existence of investment restrictions and exchange controls.

I feel that Korea merits consideration. It has a very high GDP growth rate
and export growth rate. Its GDP per capita is low enough that these growth rates
can be sustained for an extended period of time. It maintains a positive trade
balance, which reduces currency valuation risk. It has technical capability and
is investing in research and development and other infrastructure activities.
The issue is valuation. If the Morningstar valuation data is correct, prices are
still very high for Korean equities even after a decade of lackluster relative
strength performance.

Malaysia

Malaysia scored a 5.9. Its one-year and five-year relative strengths have
been lackluster. The Malaysia Fund (page D-37) shows a peak in late 1994. The
prices have been in a descending triangle formation since then. The fund prices
may have recently broken out of the triangle to the downside.

Malaysia has a fast growing population, 2% per year. Thirty seven percent of
the population is under the age of 15. It scored medium in educational emphasis.
The literacy rate is 80%. It has very few scientists and engineers. The rate of
investment in research and development is low. The GDP per capita is a low
$2956. GDP is growing at a respectable 6.5% per year. Taxes are in line with
other countries.

Malaysia’s score benefited from having no corporate capital gains tax and a
10% individual capital gain tax rate. The investment rate is high, 36% of GDP.

Malaysia’s economy is heavily dependent on exports. Exports include natural
resources and manufactured goods. Malaysia had been gaining ground in
manufacturing electronic components as the labor costs in other Asian countries
has risen. The level of exports exceeds the nation’s GDP; they amount to $3766
per capita. The level of imports is high also, $3954 per capital. The export and
import growth rates both exceed 20% per year.

I feel that Malaysia deserves further consideration. It seems to be
politically stable, have an industrious population, natural resources, and a
growing manufacturing sector. It is successful at selling its goods on the world
market. Its GDP growth rates and export growth rates are both very good. Given
the low GDP per capita, these growth rates can probably be sustained for an
extended period of time. Caution is in order here. The technical pattern
indicates that there may have been a recent downside breakout of a descending
triangle pattern, a bearish formation.

Mexico

Mexico will be the prime beneficiary of NAFTA. Its low labor costs and hard
working people will continue to attract U.S. manufacturing operations. Free
trade will provide markets for the goods and services of Mexican companies. Free
trade also permits Mexican people to benefit from goods and services furnished
by more cost efficient companies such as Wal-Mart.

Political parties in opposition to the dominant PRI party are gaining
strength and have recently won notable victories. The emergence of a multiparty
system will likely accelerate positive changes in Mexico.

Mexico’s score was a dismal 2.2. The Mexican stock market had been doing
well until a 1994 devaluation of their peso. The value of country mutual funds
typically fell be two-thirds. The values have been gradually recovering since
that time. The Mexico Fund (page D-38) price patterns indicate that the Mexican
market may have recently broken out to the upside from a symmetrical triangle.
This is a bullish development. Similar positive indications are demonstrated by
the Mexico Equity and Income Fund (page D-39), and the Mexico WEBS (page E-11).

Mexico’s population is fast growing, 1.3% per year, and young, 35% are
under the age of 15. It is politically partly free. The literacy rate is 88% but
improving. It has very few scientists and engineers. The GDP per capita is
$2,807 with a .9% average annual growth rate. Taxes are in line with most other
countries. R&D expenditures are very low. Investment as a percent of GDP is
a moderate 23.5%. Exports per capita are a low $511; the export growth rate is a
healthy 12.1%. Mexico rates low on economic risk. Average inflation has been
over 26%. Its currency has had a history of weakness.

It is hard to find much to cheer about in Mexico’s statistics. The
opportunities lie in the benefits of NAFTA, the changing political environment
(if it continues), and improved operations in recently privatized companies. I
have some money in Mexican country funds and in Mexican companies based on the
technical price patterns, but it is a country to treat with caution.

Netherlands

This country is also known as Holland. About half of the country's landmass
lies below sea level. This amount would increase should the polar ice caps melt
and slowly raise the level of the sea due to

global
warming.

The Netherlands scored 6.6, only one tenth of a point behind the United
States and on par with many other industrialized European nations. The stock
market performance has been comparable to the U.S over the last five years. The
WEBS (page E-12) indicate a strong stock market performance over the last year.

The Netherlands has a 99% literacy rate. The expected years of formal
schooling is a very high 15.5 years. The proportion of engineers and scientists
is a good 2656 per million population. The GDP per capital is $21,252; the
growth rate is slow at 2.2% per year. Inflation is controlled at 2.2 % per year
and short-term interest rates are currently 3.1%. Exports are a health $12654
per capital with an 8.2% growth rate. Trade balance is positive.

The Netherlands score was held down by high taxes. The maximum individual
income tax rate is 60% and the standard value added tax rate is 18%.

The Netherlands looks like a solid performer with well-educated and
industrious people. The GDP growth rate is low so the money will have to be made
through individual stock selection. Choice of stocks or of portfolio managers
will be critical here.

Pakistan

Much of Pakistan’s energy and attention is consumed by domestic unrest,
friction with India, and political turmoil.

Pakistan scored a very low .9. Its stock market performance over the last
five years has probably been the worst of the study countries. The performance
of the Pakistan Investment Fund (page D-40) shows a declining price and relative
strength since mid 1994. There does seem to be a support level at $5.00. The
current price at $6.18 indicates a positive breakout of a decreasing triangle
formation. Resistance levels are at $7.00 and $7.50.

It is hard to understand why a country with some of the worst conditions of
any country has the highest population growth rate, 2.71% per year. Forty two
percent of the population is under the age of 15.

Pakistan’s scores are dismal across the board. I can find no glimmer of
hope here other than a short-term technical bounce.

Philippines

Who can remember that there is a single "l" and a double
"p" in Philippines?

The Philippines is still trying to find itself after 400 years of Spanish
rule followed by U.S. dominance.

The Philippines scored a dismal 1.7. The stock market performance over the
last five years has been poor. The First Philippine Fund showed strong gains
from 1991 through 1993. The market had a double top in 1993 and 1994 and has
fallen since. It appears that the prices have recently broken out of a declining
triangle pattern to the downside. The next support level is at $12.00.

There is little in the numbers to hang one’s hat on.

Another country to stay away from.

Portugal

Portugal is the least developed of the Western European countries. It scored
a 5.0. Its stock market has been buoyed up by optimism that inclusion in the
European Union would benefit Portugal. The Portugal Fund (page D-42) peaked in
late 1994, fell and bottomed in late 1995 or early 1996. It has been on a strong
upward trend since then. The relative strength is moving sideways. In spite of
this recent strength, the Portugal Fund is at the same level that it was in
1990.

The scores generally lagged other Western European countries across the
board. The only high point was low capital gains tax rates, 3.6% corporate and
10% individual.

Portugal is a European Union play. The stock values of Portugal, along with
other second tier European countries have benefited from the belief that
membership in the EU would pull them up. Will it? By how much? That is a
separate study. But one thing I know. There is a whole continent of smart people
who are thinking about it every day. They will make the money that is to be
made. Unless one is willing to commit to learning the subject, he or she is best
to stay away.

Russia

Russia is undergoing massive changes – from no political repression to
political freedom, from a command economy to a market economy.

Russia has a highly educated population. Its proportion of engineers and
scientists exceeds all the European countries and the United States. It has a
large land mass, undoubtedly with a lot of natural resources, both discovered
and undiscovered.

Russia scored low, 3.1. I believe, however, that this is a case where the
scores should be ignored. The changes are massive, but the people are educated
and have shown perseverance under extreme hardship in the past. Although the
country and its economy are struggling, I feel that the people will be
successful. I think that this is a bet that has to be made. The potential upside
is so great here. This is a bet where one risks losing 100% of the money
invested, but is likely to make 1000%. The Russian stock market seems to agree.
Russian mutual funds (pages D-43 and D-44) are up substantially this year. The
Templeton Russian fund is up over three-fold in spite of a recent correction.

Singapore

Singapore, a city-state with 3.4 million people, located at the tip of
Malaysia, was the top scoring country.

Singapore was the top scoring country, 10. Singapore scored this high in
spite of lack of political freedom, a fairly strong population growth, a mix of
religions not especially conducive to business, unimpressive scores for literacy
and educational emphasis and a short history as a nation.

The Singapore Fund (page D-45) peaked in 1993 and has been on the decline
ever since.

Singapore does a lot of things right. Singapore’s GDP per capita is $18,293
with a growth rate of 7.3%. It is able to maintain this high growth rate with
low inflation, 2%. Short-term interest rates are currently 3.6%. Income taxes
are moderate. There is no value-added tax. There are no capital gains taxes.
Singapore spends a mid-range 3% of GDP on research and development. There are
2512 scientists and engineers per million population. Singapore has not
investment restriction by nonresidents and no exchange controls. Exports per
capita are $39,565 with a 17.6% annual growth rate.

Singapore got a lot of notoriety a while back for caneing a young man who was
caught vandalizing cars by spray painting them. President Clinton made a big
deal about it. The young man was ultimately expelled from Singapore and sent to
the U.S. under custody of his father. Several months later, the young man was in
a U.S. court; this time for beating up his father.

I like Singapore. I’ll wait until the current stock market decline is over
to invest though.

South Africa

South Africa has the richest gold field in the world. It is also a major
producer of diamonds and uranium.

South Africa’s score is 2.1. Its stock market has been a mediocre performer
over the last five years. The New South Africa fund (page D-46) spiked in early
1990 and declined for the rest of the year. The start of 1997 was the start of a
new advance. The relative strength is currently sliding sideways but remains
within a 2-½ year down trend.

South Africa has a fast growing population, 2.2% per year. Thirty-seven
percent of the population is under age 15. The literacy rate is a low 60% even
though the country spends 7.1% of its GNP on education. The number of scientists
and engineers is a low 319 per million population. GDP per capital is $2,690
with a GDP growth rate of 1%: less than the population growth rate. Exports are
$677 per capital with a 3.5% growth rate in total exports.

South Africa’s scores would have been lower yet if it weren’t for the
fact that it has no individual capital gains tax and not investment restriction
for nonresidents. It does have exchange controls though.

Several years ago civil rights activists were pressuring mutual funds and
pension funds to terminate their investments in South Africa to pressure South
Africa to end its policy of apartheid. It looks like the activists were doing
the funds a favor.

Spain

Spain is the land of Don Quixote, a favorite country of Ernest Hemingway,
home of painters El Greco, Diego Velazquez, Francisco Goya, Salvadore Dali, and
Pablo Picasso. The ancestry of the people is that of the many nations that
conquered Spain over the centuries. It has a rich history of kings, queens, and
politics. It was a global power in the sixteenth century. Political turmoil
continues to this day.

Spain scored 4.0, the lowest score of the Western European countries. Its
stock market has performed well recently, at least partly because of the belief
that inclusion in the European Union will benefit Spain. The Spain Fund (page
D-48, also see the Growth Fund of Spain, page D-47) spiked in 1989, then
declined over the next year by more than two-thirds. After a bounce it declined
another 50% and entered into a four year descending triangle pattern with
support at $8.00. It broke out to the upside in late 1996 and is currently at
$14.00. There is a support level at $13.00 and resistance at $16.00, both weak.
The relative strength appears to have broken its downtrend line.

Spain’s scores generally trailed the other Western European nations. It
does have high individual taxes. The maximum national individual tax rate was
one of the worlds highest at 56%. In addition there are local income taxes.
There is a 15% standard value-added tax rate. And the maximum capital gains tax
is the same as the income tax rate, a near world high at 56%. Unemployment is
the highest of all the study countries, 22.9%.

I would like to visit Spain. It’s not where I want to invest though.

Sweden

Sweden gained a head start on most of Europe by maintaining neutrality during
World War II and through most of the Cold War.

Sweden scored just ahead of the United States, 6.8. The WEBS (Page E-15) has
shown strong performance over the last year. The relative strength has been
sideways, indicating stock market performance matching the S&P 500.

Sweden has a mature population with just 19% under the age of 15. The growth
rate is .25%. Its people are predominantly Lutheran and are highly educated.
There are 3714 engineers and scientists per million population, the highest in
Western Europe and on par with the U.S. R&D expenditures are 3.5% of GNP,
the highest of the study countries. GDP per capita is $26,4223. It has low
inflation. Short-term interest rates are currently 4%.

Sweden has been experiencing a recession through much of the 1990’s. Its
GDP growth rate is an anemic 1.5%. Although Sweden’s corporate tax rates are
moderate, individual tax rates are high and the standard value added tax rate of
25% is the highest of all the study countries.

Sweden is worth considering as an investment. Its economy is probably being
held back by high individual tax rates and the high value added tax. Sweden has
been reducing individual tax rates in response to the recession.

Switzerland

Like Sweden, Switzerland maintained neutrality during World War II and was
able to preserve its industrialized society and its culture, giving it an
advantage over its neighbors. It is one of the world’s most highly
industrialized societies.

Switzerland scored a 7.3, tying it with Japan for fourth place. Its stock
market performance over the last five years has been respectable. The Swiss
Helvetica Fund (page D-49) has been in an upward trend since 1990. The fund
encountered a resistance level of $24.00 in 1994 and traded in a symmetrical,
slightly ascending, triangle pattern until early 1997. It has broken out to the
upside and currently trades at $25.43. The relative strength has been declining
since late 1993 and is currently up against a downtrend line.

Switzerland has a mature population with just 17% under the age of 15. The
growth rate is .67%. The population growth has not kept up with job growth.
About one-fifth of the Switzerland employees are foreign. The Swiss people are
well educated and well paid. The average GDP per capital is $34,738, the highest
of the study countries. The GDP growth rate is an anemic 1.5-% however.
Inflation is the lowest of the study countries, 1.35% and short-term interest
rates are also very low, 1.6%. Taxes are moderate. Exports per capita are
$11,023 with a low 4% growth rate. Political, economic, and financial risk is
low. The currency has a history of appreciating against the U.S. dollar.

Switzerland looks like a good bet. In addition, the technical price pattern
looks like this is an opportune time to buy.

Taiwan

Taiwan is the seat of government for the Republic of China. Mainland China,
the People’s Republic of China (PRC), claims the Republic of China as a
province. The PRC has consistently refused to renounce the possibility of using
force to gain control of Taiwan. Taiwan has been the seat of the Republic of
China since 1949, when Communist armies gained control of the Chinese mainland.
The decision by the U.S. government to seek contacts with the People's Republic
led to the expulsion of Taiwan from China's seat in the United Nations and the
seating of the rival regime in 1971, a morally deplorable decision in the
opinion of the author. In the wake of these developments many other nations
withdrew their diplomatic recognition of Taiwan.

The lack of diplomatic recognition has not seemed to hurt Taiwan’s trade.
It has a 24.6 % export growth rate and enjoys a healthy trade balance.

Taiwan shares Mainland China’s ancient and enterprising culture. With
greater political and economic freedom, it has prospered much more than Mainland
China. Its GDP per capita is ten times greater at $4325. It maintains a high GDP
growth rate of 7%.

Taiwan’s score was 8.0, the third highest following Singapore and Hong
Kong. However the score was generated based on limited data. United Nations and
International Monetary Fund data was not available for Taiwan. Much of the data
used conflicted from source to source. Even something as basic as population
data varied from 20 million to 25 million from source to source.

The Taiwan country funds (pages D-50, D-51, D-52) indicate than the Taiwanese
stock market fell precipitously in 1989, losing approximately 60% of its value.
Since then it has been in a volatile weak up trend. In early 1997, it broke of a
three-year symmetric triangle pattern to the upside.

Due to the lack of data, I don’t have confidence in the score; but the high
score based on the data that exists and the positive technical price pattern
indicate that Taiwan deserves consideration and further study.

Thailand

Thailand scored a mid-range 5.7; its performance has been lackluster over the
last one-year and five year periods. The performance of the Thai Capital Fund
(page D-53) and the Thai Fund (page D-54) indicate that the market had a double
top with the tops occurring in 1990 and 1993. Since 1993 the prices have been in
an accelerating downtrend culminating with Thailand’s decision to float its
currency on July 2, 1997. The stock prices immediately bounced up but have
fallen back since.

Thailand is a country rich in natural resources and historically one of Asia’s
most prosperous countries. However much of Thailand’s advantages have been
lost due to extensive political turmoil since World War II.

Thailand’s scores benefited from a high GDP growth rate; high investment
rate; lack of capital gains taxes and lack of exchange controls.

Thailand’s scores suffered from lack of political freedom, large population
under age 15, predominantly Buddhist religion, a low level of scientists and
engineers, an accelerating inflation rate, low levels of R&D expenditures,
high interest rates, and high political risk.

On July 2, 1997 Thailand was forced to allow its currency to float. The
currency was under attack and a 13-year link to a dollar denominated basket of
currencies was cut. In a July 11 article, the Financial Times reported that Siam
Cement, the largest company in Thailand, would take a loss of $258.5M U.S. on
$4B U.S. foreign currency loans. Taking this entire loss this year will pipe out
the profit for the year. The Financial Times said that this action on the part
of Siam Cement will pressure other companies to take the loss this year rather
than spread it out over several years. The article said that there is no long
term Baht market – so companies have been forced to borrow abroad. The total
Thai based foreign currency losses are expected to be $70 B U.S.

In spite of Thailand’s good score, I think that I would be cautious. The
political turmoil, increasing inflation and the low level of product development
capability will make it hard for the country to advance in the technologically
based global economy. In addition, there may be additional downward pressure on
the currency.

Turkey

Turkey is a turkey. It was the lowest scoring country in the study. Turkey
suffers from continuing political upheaval.

The Turkish Investment Fund (page D-55) has been very volatile. In 1990 it
traded at $14.00, fell to $5.00 by 1993, jumped up to $14.00 in 1994, and fell
back to $5.00 by 1995. Since 1994, it has been in a trading range of $5.00 to
$7.50. The Relative strength has been declining since early 1994.

Turkey generally received moderate and low scores throughout. GDP growth rate
was a lowish 2.7%. The average inflation rate has been 82% with acceleration in
later years. The maximum individual tax rate is 55%. It has a 15% value added
tax. The short-term interest rate is 66%. It has investment restrictions and
exchange controls. The level of exports is very low and the growth rate is very
low. Its trade balance deficit is 3.3% of GNP.

This is a good country to keep your money away from.

United Kingdom

England is the land of my ancestors. They were keepers of the Royal Forest,
the wood wardens. They moved to the United States during the mid-1800’s. The
patriarch was killed in the Civil War. The kids moved on to West Texas, became
cattle ranchers, and helped settle the area around Marfa, Texas.

Twenty years ago England’s economy was a mess: high inflation coupled with
high unemployment, lots of labor strikes, and a series of price and wage
freezes. In the election of April 1979, the Conservatives prevailed and Margaret
Thatcher became Prime Minister. She initiated a program of controlling inflation
with budget cuts and high interest rates. Several large government-owned
industries were privatized. This resulted in very high unemployment. Argentina
came to Margaret Thatcher’s aid. It invaded the Falkland Islands, a
British-held group of islands in the South Atlantic. The British people rallied
around Mrs. Thatcher’s war to repulse the Argentineans. The Conservatives
prevailed in 1983 as a result of the support of the Falklands policies and thus
Margaret Thatcher’s policies had time to work. Only this year has the Labor
Party regained the majority of parliamentary seats and the prime ministry.

The United Kingdom scored a 6.3, a respectable score. The United Kingdom Fund
(page D-56) showed a sharp decline in 1987 in sympathy with the U.S crash. It
bounced back quickly and traded in a trading range until 1994. The fund has been
in an upward price pattern since then with one peak in late 1994. The rise has
not matched that of the U.S. S&P 500 index. The relative strength has been
fallen during that time. The WEBS (page E-17) price pattern has indicated a
healthy advance in the last 10 months.

The United Kingdom has a mature population with 19% of the population under
the age of 15. The forecasted growth rate is less than .1%. The people are well
educated with an expectation of 14.9 years of formal schooling. The second
highest of the study countries. There are 2417 scientists and engineers per
million population. The per capita GDP is $18,779. The GDP growth rate is an
anemic 2.4%. Inflation is low. Current short-term interest rates are 6.9%.
Income taxes, historically infamous, are now in line with other industrialized
countries. The value-added tax remains high at 18%. There is no corporate
capital gain tax. The maximum individual capital gain tax is high at 40%.
Exports per capital are moderate at $4,141. The export growth rate is 5.5%

England review is mixed. It has made a lot of positive progress. It has a
highly educated work force. It has a long history of being one of the world’s
most industrialized countries and of being a world financial center. But it has
no exceptional investment characteristics. In addition, the electorate seems to
be swinging back to the left as evidenced by the recent Labor Party victories.

United States

The United States was a victor in World War II. World War II served to build
its industrial base. The U.S. was geographically isolated and did not suffer
from invasion or bombing. Its head start kept it in front of the pack for quite
a while. But it appears that others in the pack have caught up; some may have
gone ahead.

The United States scored a respectable 6.7; trailing Singapore, Hong Kong,
Taiwan, Japan, Switzerland, and Sweden. Its score was comparable to many of the
industrialized Western European countries.

The population is the third largest of the study countries, 272 million.
About 22% are under age 15. The forecasted growth rate is about .8%. The people
are well educated with an expectation of 16 years of formal schooling, the
highest of the study countries. The number of scientists and engineers is 3732
per million population, third highest behind Japan and Russia. The GDP per
capital is $23,320 trailing Switzerland, Sweden, and Japan. The GDP growth rate
is an anemic 2.6%. Inflation rate is low at 2.82%. Short-term interest rates are
currently 5.6%. Income taxes and capital gains taxes are on the high side. There
is no value-added tax, however there are state and local sales taxes. Exports
per capital are low, $2,223 with a low growth rate of 2.8% in total exports.
Imports per capital are $2930. The United States rates well on political,
financial, and economic risk.

I invest here because I am here and have not previously been exposed to
investments in other countries. Although the U.S. stock market has done very
well in the last ten years, this study points out that the U.S. is not the only
game around. There are other countries that have strengths where the U.S. has
weaknesses, most with higher growth rates.

Chen, Kathy; China Is Encouraging
Private Home Buying, And It Is Rising Fast; Wall Street Journal; July 16,
1997; p1